During the holiday season, U.S. retail sales, excluding automotive, increased 3.8 percent year-over-year, according to the latest preliminary insights from Mastercard SpendingPulse.
Consumers increasingly preferred digital-first shopping this year, with e-commerce, curbside pick-up and delivery being top-of-mind for the festive season. From November 1 to December 24, online retail sales grew 6.7 percent year-over-year, whereas in-store sales increased 2.9 percent.
“The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value as can be seen by concentrated e-commerce spending during the biggest promotional periods,” said Michelle Meyer, chief economist, Mastercard Economics Institute.
Holiday spending trends
Empowered U.S. consumers sought value at every turn this year, responding to promotions during the November and Black Friday shopping period, and filling their baskets in the run-up to December 24. Overall retail sales saw a 3.8 percent increase compared to 2023, with the last five days of the holiday season accounting for 10 percent of all holiday spending.
Notably, the apparel sector showed a strong lead in e-commerce sales, with 6.7 percent growth for online purchases compared to last year.
“This holiday season, we saw consumers motivated by deals and retailers respond with promotions to meet the demand. The value-minded consumer showed up to shop at brick-and-mortar stores and e-commerce platforms, with retailers managing across both to capture attention throughout the season,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated.
Consumer demand for experiences like dining out strengthened in the holiday season, with restaurant spending growth up 6.3 percent compared to last year. Additionally, this season saw an increase in spending growth on goods compared to last year, with apparel, jewelry and electronics as notable sectors for gift-giving.
While many Americans shop online for the holidays, there are some cities in particular that have embraced e-commerce. Cities like Tampa and Phoenix lead with double digital growth followed by Minneapolis, Dallas, Charlotte, Orlando and Houston coming in well above the national total for e-commerce sales compared to 2023.
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Healthy labor market propels spending
In November, the U.S. labor market remained healthy despite a rise in inflation. The number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week, consistent with a cooling but still healthy U.S. labor market. U.S. job growth also surged in November after being severely hindered by hurricanes and strikes in October.
“Solid spending during this holiday season underscores the strength we observed from the consumer all year, supported by the healthy labor market and household wealth gains,” added Meyer.
The labor market’s resilience is driving the economy through strong consumer spending, with the latest employment report from the Labor Department showing solid wage growth last month. However, U.S. consumer prices increased in November by the most in seven months and progress in lowering inflation toward the 2 percent target has virtually stalled.
Despite persistent inflationary pressures, the resilient labor market and strong wage growth were key factors in raising U.S. holiday retail sales this season.
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